Canadian snack company Humpty Dumpty Snack Foods has reported net earnings of C$1.1m (US$0.7m) for the first quarter to 31 December, compared to $1.3m in the prior year period.
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The company said gross margin in the fiscal first quarter was 42.3% of net sales compared with 44.6% in the previous year, primarily due to increased frying oil costs that have resulted from higher commodity prices.
EBITA (earnings before interest, income taxes and amortization) was $2.4m in the quarter, compared to $3.1m in the prior year, primarily due to higher manufacturing input costs, particularly frying oil, together with lower private label sales in Canada and the US.
The company said growth in branded sales was offset by continued private label softness both domestically and in the US. A shift in sales towards independent distributors in the US market has increased distributor discounts, reducing reported revenue. The combination of these factors contributed to a 2.6% decrease in net sales in the quarter to $42.6m.
“This was a particularly challenging quarter during which we were required to undertake a thorough and objective assessment of an unfriendly take-over bid,” said Gerald P. Schmalz, chairman and CEO. “Based on this assessment and other inputs, our board of directors unanimously recommended rejection and less than 2% of the company’s shares were deposited prior to the offer’s expiry.”
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